FX.co ★ New Zealand Dollar Strengthens

On Monday, the New Zealand dollar rose to approximately $0.574, recovering from earlier losses, after new data revealed that inflationary pressures had peaked at their highest level in over a year. The third-quarter annual inflation rate climbed to 3%, hitting the upper boundary of the central bank’s 1–3% target range. Despite the rise, this increase was anticipated, with analysts noting that for several months, the Reserve Bank of New Zealand (RBNZ) had indicated the possibility of the third-quarter Consumer Price Index (CPI) exceeding its target range. The latest figures, in alignment with expectations, were a relief for the central bank. Additionally, the data indicated that the underlying inflation measures remained stable, reinforcing the expectation that policymakers are likely to implement a rate cut in November. Market swaps have fully accounted for a 25 basis points cut, with a slight possibility of a 50 basis points reduction. Furthermore, sentiment was buoyed by an easing of US–China trade tensions, which alleviated some risks for New Zealand's export-driven economy, although gains were limited by weak data from China, a key trading partner.